Schnitzer Reports Third Quarter 2018 Financial Results

Best Quarterly Consolidated Operating Income Since Fiscal 2011

SSI Ferrous Volumes Up 18% Year-over-Year

June 26, 2018 08:30 AM Eastern Daylight Time

PORTLAND, Ore.--(BUSINESS WIRE)--Schnitzer Steel Industries, Inc. (Nasdaq: SCHN) today reported results
for its third quarter of fiscal 2018 ended May 31, 2018. The Company
reported earnings per share from continuing operations of $1.31 and
adjusted earnings per share of $1.26. These results are more than double
the prior year third quarter earnings per share from continuing
operations of $0.60 and adjusted earnings per share of $0.56. Reported
and adjusted earnings per share from continuing operations in the second
quarter of fiscal 2018 were $1.42 which include discrete tax benefits of
$0.52 per share. For a reconciliation of the adjusted results to U.S.
GAAP, see the Non-GAAP Financial Measures provided after the financial
statements in this document.

Auto and Metals Recycling’s (AMR) operating income of $55 million, or
$56 per ferrous ton, was significantly higher than the prior year third
quarter operating income of $30 million, or $36 per ferrous ton.
Adjusted operating income was $54 per ferrous ton compared to adjusted
operating income of $34 per ferrous ton in the prior year third quarter.
Supported by stronger global demand for its products, AMR’s improved
operating performance year-over-year was driven primarily by expanded
metal spreads, higher ferrous sales volumes of 19%, higher average
ferrous and nonferrous net selling prices of 31% and 14%, respectively,
benefits from commercial initiatives to increase our supply volumes, and
sustained contributions from productivity improvements.

Cascade Steel and Scrap (CSS) delivered third quarter operating income
of $11 million, representing a $10 million improvement compared to the
prior year third quarter. The strong CSS operating performance was
driven primarily by a 29% increase in finished steel average net selling
prices which significantly outpaced the increase in the cost of
steelmaking raw materials, higher utilization, and benefits of
productivity improvements from the integration of our steel
manufacturing and Oregon metal recycling operations.

Tamara Lundgren, President and Chief Executive Officer, commented, “Our
third quarter financial results reflect continued strong financial and
operating performance in both of our businesses. AMR’s sales volumes
increased significantly versus last year, and its third quarter
operating income per ton achieved levels last reached in fiscal 2011 at
a time when both volumes and scrap prices were much higher than today.
CSS also delivered excellent results, significantly expanding its
operating margins through higher steel prices, improved utilization, and
continued focus on operating efficiencies and productivity initiatives.
The strong operating cash flow we generated in the quarter allowed us to
reduce debt and also return capital to shareholders through both our
dividend and the repurchase of shares.”

Summary Results

($ in millions, except per share amounts)

Quarter

3Q18

3Q17

Change

2Q18

Change

Revenues

$

652

$

477

37

%

$

559

17

%

Operating income

$

51

$

19

168

%

$

33

54

%

Other asset impairment charges (recoveries), net

(1

)

(1

)

40

%

—

NM

Restructuring charges and other exit-related activities

—

—

NM

—

NM

Recoveries related to the resale or modification of previously
contracted shipments

—

—

NM

—

NM

Adjusted operating income(1)

$

50

$

18

176

%

$

33

49

%

Net income attributable to SSI

$

37

$

17

126

%

$

41

(9

)%

Net income from continuing operations attributable to SSI

$

37

$

17

124

%

$

41

(8

)%

Adjusted net income from continuing operations attributable to SSI(1)

$

36

$

16

132

%

$

41

(12

)%

Diluted earnings per share attributable to SSI

$

1.31

$

0.60

118

%

$

1.42

(8

)%

Diluted earnings per share from continuing operations attributable
to SSI

Volumes: Ferrous sales volumes in the third quarter
increased 19% compared to the prior year third quarter, and increased
10% sequentially, primarily due to stronger export and domestic demand
for recycled metals and commercial initiatives to increase our supply
flows. Nonferrous sales volumes were 3% lower compared to the prior year
third quarter and 13% higher compared to the second quarter of fiscal
2018.

Export customers accounted for 70% of total ferrous sales volumes. Our
products, including ferrous, nonferrous and recycled auto parts, were
shipped to 23 countries in the third quarter of fiscal 2018, with
Bangladesh, Turkey and Thailand as the top export destinations for
ferrous shipments.

Pricing: Average ferrous net selling prices increased $79
per ton, or 31%, compared to the prior year third quarter, and were up
$23 per ton, or 7%, sequentially. Average nonferrous net selling prices
increased 14% compared to the prior year third quarter, while increasing
by 3% sequentially.

Margins: Operating income was $55 million in the third
quarter, an increase of $25 million or 86% compared to the prior year
third quarter and an increase of $10 million or 22% compared to the
second quarter of fiscal 2018. Operating income included a benefit
primarily from the sale of assets of $1 million in the third quarter of
fiscal 2017 and 2018. Adjusted operating income was $54 million in the
third quarter, an increase of $25 million or 89% compared to the prior
year third quarter. Additionally, operating income per ferrous ton of
$56 represented an increase of $20 or 56% from the prior year third
quarter and a sequential increase of $6 or 11%. Adjusted operating
income was $54 per ferrous ton compared to $34 per ferrous ton in the
prior year third quarter. The improved performance compared to the prior
year third quarter was driven by metal spread expansion from higher
priced shipments, increased ferrous sales volumes, and higher average
ferrous and nonferrous net selling prices. The impact from average
inventory accounting in the quarter was a benefit of $2 million,
compared to a benefit of $4 million in the previous quarter and an
adverse impact of $1 million in the prior year third quarter.

Cascade Steel and Scrap

Summary of Cascade Steel and Scrap Results

($ in millions, except selling prices)

Quarter

3Q18

3Q17

Change

2Q18

Change

Steel revenues

$

104

$

82

27

%

$

82

27

%

Recycling revenues

26

14

85

%

35

(25

)%

Total revenues

$

130

$

96

35

%

$

117

11

%

Operating income

$

11

$

1

828

%

$

5

99

%

Finished steel average net sales price ($/ST)(1)

$

703

$

545

29

%

$

619

14

%

Finished steel sales volumes (000s ST)

140

141

(1

)%

125

12

%

Rolling mill utilization

91

%

85

%

7

%

83

%

10

%

(1) Price information is shown after netting the cost of
freight incurred to deliver the product to the customer.

NM = Not Meaningful

Volumes: Finished steel sales volumes in the third quarter
were consistent with the prior year third quarter. Sequentially,
finished steel sales volumes increased 12% primarily due to seasonally
higher demand.

Pricing: Average net sales prices for finished steel
products increased 29% from the prior year third quarter and 14%
sequentially, reflecting the impact of higher raw material prices
year-over-year and reduced pressure from steel imports.

Margins: Operating income for the third quarter of fiscal
2018 was $11 million, a significant improvement of $10 million from the
prior year third quarter and approximately double the results in the
second quarter of fiscal 2018. The improved year-over-year performance
reflected an expansion in finished steel margins resulting from higher
average selling prices which significantly outpaced the increase in cost
of steelmaking raw materials. The third quarter also benefited from
higher utilization and incremental productivity improvements resulting
from the integration of our steel manufacturing and Oregon metal
recycling operations. Third quarter results were higher sequentially,
primarily as a result of expanded metal margins from higher average net
selling prices and increased sales volumes.

Corporate Items

In the third quarter of fiscal 2018, consolidated financial performance
included Corporate expense of $14 million, an increase of $3 million
from the prior year third quarter, primarily driven by higher
professional service expenses and increased incentive compensation
accruals as a result of improved operating performance.

The Company’s effective tax rate for the third quarter of fiscal 2018
was an expense of 21.7% which reflects the application to current year
projected taxable income of the lower blended federal statutory
corporate tax rate established by the tax reform legislation enacted in
December 2017. The Company’s accounting for the impact of the tax reform
legislation, including the amounts discussed herein, reflects
provisional estimates as of May 31, 2018, which may be adjusted over the
course of the next three quarters.

In the third quarter of fiscal 2018, the Company generated operating
cash flow of $64 million, driven primarily by our increased
profitability. Total debt at the end of the third quarter of fiscal 2018
was $173 million, and debt, net of cash was $163 million compared to
debt of $211 million and debt, net of cash of $196 million at the end of
the second quarter (refer to Non-GAAP Financial Measures provided after
the financial statements in this document).

Pursuant to its ongoing authorized share repurchase program, during the
third quarter the Company repurchased a total of 166,013 shares of its
Class A common stock in open market transactions. The Company also
returned capital to shareholders through its 97th consecutive quarterly
dividend.

Analysts’ Conference Call: Third Quarter of Fiscal 2018

A conference call and slide presentation to discuss results will be held
today, June 26, 2018, at 11:30 a.m. EDT hosted by Tamara Lundgren,
President and Chief Executive Officer, and Richard Peach, Senior Vice
President, Chief Financial Officer, and Chief of Corporate Operations.
The call and the slides will be webcast and accessible on the Company’s
website under Company > Investors > Event Calendar at www.schnitzersteel.com/events.

Summary financial data is provided in the following pages. The slides
and related materials will be available prior to the call on the website.

SCHNITZER STEEL INDUSTRIES, INC.

FINANCIAL HIGHLIGHTS

(in thousands)

(Unaudited)

For the Three Months Ended

For the Nine Months Ended

May 31,2018

February 28,2018

May 31,2017

May 31,2018

May 31,2017

REVENUES:

Auto and Metals Recycling:

Ferrous revenues

$

363,566

$

307,687

$

236,833

$

926,236

$

594,366

Nonferrous revenues

127,288

110,388

113,487

348,019

283,096

Retail and other revenues

38,757

31,710

35,076

103,195

92,849

Total Auto and Metals Recycling revenues

529,611

449,785

385,396

1,377,450

970,311

Cascade Steel and Scrap:

Steel revenues

103,726

81,542

81,966

265,714

192,852

Recycling revenues

26,350

35,172

14,259

71,060

41,519

Total Cascade Steel and Scrap revenues

130,076

116,714

96,225

336,774

234,371

Intercompany sales eliminations

(7,271

)

(7,056

)

(4,533

)

(19,086

)

(11,349

)

Total revenues

$

652,416

$

559,443

$

477,088

$

1,695,138

$

1,193,333

OPERATING INCOME (LOSS):

AMR operating income

$

54,980

$

45,132

$

29,520

$

135,284

$

67,414

CSS operating income (loss)

$

10,793

$

5,413

$

1,163

$

24,682

$

(2,744

)

Consolidated operating income

$

51,234

$

33,358

$

19,147

$

111,015

$

33,905

Adjusted AMR operating income(1)

$

53,515

$

45,132

$

28,305

$

133,402

$

65,643

Adjusted CSS operating income (loss)(1)

10,793

5,413

1,163

24,594

(2,343

)

Adjusted segment operating income(1)

64,308

50,545

29,468

157,996

63,300

Corporate expense

(14,467

)

(16,750

)

(11,272

)

(47,861

)

(30,684

)

Intercompany eliminations

(2

)

(346

)

(171

)

(829

)

(281

)

Adjusted operating income(1)

49,839

33,449

18,025

109,306

32,335

Other asset impairment (charges) recoveries, net

1,465

—

1,044

1,553

643

Restructuring charges and other exit-related activities

(70

)

(91

)

(93

)

(261

)

200

Recoveries related to the resale or modification of certain
previously contracted shipments

—

—

171

417

727

Total operating income

$

51,234

$

33,358

$

19,147

$

111,015

$

33,905

(1) See Non-GAAP Financial Measures for reconciliation to
U.S. GAAP.

SCHNITZER STEEL INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands)

(Unaudited)

For the Three Months Ended

For the Nine Months Ended

May 31,2018

February 28,2018

May 31,2017

May 31,2018

May 31,2017

Revenues

$

652,416

$

559,443

$

477,088

$

1,695,138

$

1,193,333

Cost of goods sold

549,164

472,462

411,109

1,427,877

1,033,805

Selling, general and administrative

54,185

53,638

48,451

158,866

129,766

(Income) from joint ventures

(772

)

(106

)

(668

)

(1,328

)

(3,300

)

Other asset impairment charges (recoveries), net

(1,465

)

—

(1,044

)

(1,553

)

(643

)

Restructuring charges and other exit-related activities

70

91

93

261

(200

)

Operating income

51,234

33,358

19,147

111,015

33,905

Interest expense

(2,483

)

(2,281

)

(2,131

)

(6,823

)

(5,969

)

Other income, net

403

101

524

1,353

1,318

Income from continuing operations before income taxes

49,154

31,178

17,540

105,545

29,254

Income tax (expense) benefit

(10,650

)

10,577

(161

)

(6,030

)

(736

)

Income from continuing operations

38,504

41,755

17,379

99,515

28,518

Income (loss) from discontinued operations, net of tax

(56

)

164

(127

)

72

(275

)

Net income

38,448

41,919

17,252

99,587

28,243

Net income attributable to noncontrolling interests

(1,046

)

(903

)

(687

)

(2,806

)

(1,967

)

Net income attributable to SSI

$

37,402

$

41,016

$

16,565

$

96,781

$

26,276

Net income per share attributable to SSI:

Basic:

Income per share from continuing operations attributable to SSI

$

1.35

$

1.47

$

0.60

$

3.49

$

0.97

Income (loss) per share from discontinued operations attributable to
SSI

—

0.01

—

—

(0.01

)

Net income per share attributable to SSI

$

1.35

$

1.48

$

0.60

$

3.49

$

0.96

Diluted:

Income per share from continuing operations attributable to SSI

$

1.31

$

1.42

$

0.60

$

3.38

$

0.96

Income (loss) per share from discontinued operations attributable to
SSI

—

0.01

—

—

(0.01

)

Net income per share attributable to SSI(1)

$

1.31

$

1.42

$

0.60

$

3.38

$

0.95

Weighted average number of common shares:

Basic

27,676

27,797

27,601

27,719

27,499

Diluted

28,636

28,805

27,703

28,646

27,692

Dividends declared per common share

$

0.1875

$

0.1875

$

0.1875

$

0.5625

$

0.5625

(1) May not foot due to rounding.

SCHNITZER STEEL INDUSTRIES, INC.

SELECTED OPERATING STATISTICS

(Unaudited)

YTD

1Q18

2Q18

3Q18

2018

SSI Total Volumes(1)

Total ferrous volumes (LT)

912,145

1,062,260

1,118,743

3,093,148

Total nonferrous volumes (000s LB)

141,046

144,024

162,667

447,737

Auto and Metals Recycling

Ferrous selling prices ($/LT)(2)

Domestic

$

259

$

278

$

314

$

286

Export

$

306

$

327

$

347

$

328

Average

$

292

$

314

$

337

$

316

Ferrous sales volume (LT)

Domestic

237,464

239,571

293,323

770,358

Export

559,154

656,738

690,019

1,905,911

Total

796,618

896,309

983,342

2,676,269

Nonferrous average price ($/LB)(2)(3)

$

0.73

$

0.72

$

0.74

$

0.73

Nonferrous sales volume (000s LB)(3)

129,137

129,549

146,043

404,729

Car purchase volume (000s)(4)

108

102

109

319

Auto stores at end of quarter

53

53

53

53

Cascade Steel and Scrap

Finished steel average sales price ($/ST)(2)

$

599

$

619

$

703

$

642

Sales volume (ST)

Rebar

84,243

79,718

91,603

255,564

Coiled products

40,928

43,056

46,673

130,657

Merchant bar and other

2,049

1,937

1,945

5,931

Finished steel products sold

127,220

124,711

140,221

392,152

Rolling mill utilization(5)

95

%

83

%

91

%

90

%

(1) Ferrous and nonferrous volumes sold externally by AMR
and CSS and delivered to our steel mill for finished steel
production.

(2) Price information is shown after a reduction for the
cost of freight incurred to deliver the product to the customer.

(3) Excludes PGM metals in catalytic converters.

(4) Cars purchased by auto parts stores only.

(5) Rolling mill utilization is based on effective annual
production capacity under current conditions of 580 thousand tons of
finished steel products.

SCHNITZER STEEL INDUSTRIES, INC.

SELECTED OPERATING STATISTICS

(Unaudited)

Fiscal

1Q17

2Q17

3Q17

4Q17

2017

SSI Total Volumes(1)

Total ferrous volumes (LT)

833,889

852,036

951,230

990,516

3,627,671

Total nonferrous volumes (000s LB)

136,057

122,554

161,832

164,342

584,785

Auto and Metals Recycling

Ferrous selling prices ($/LT)(2)

Domestic

$

169

$

237

$

263

$

257

$

236

Export

$

203

$

252

$

255

$

263

$

244

Average

$

194

$

247

$

258

$

262

$

242

Ferrous sales volume (LT)

Domestic

197,255

220,975

291,227

238,930

948,387

Export

519,510

518,200

534,164

625,168

2,197,042

Total

716,765

739,175

825,391

864,098

3,145,429

Nonferrous average price ($/LB)(2)(3)

$

0.58

$

0.64

$

0.65

$

0.64

$

0.63

Nonferrous sales volume (000s LB)(3)

125,817

114,275

150,356

150,343

540,791

Car purchase volume (000s)(4)

94

96

108

113

411

Auto stores at end of quarter

52

52

53

53

53

Cascade Steel and Scrap

Finished steel average sales price ($/ST)(2)

$

492

$

517

$

545

$

565

$

534

Sales volume (ST)

Rebar

73,903

69,136

84,166

96,323

323,528

Coiled products

23,934

34,371

54,629

48,349

161,283

Merchant bar and other

3,038

2,482

2,426

2,759

10,705

Finished steel products sold

100,875

105,989

141,221

147,431

495,516

Rolling mill utilization(5)

65

%

89

%

85

%

95

%

83

%

(1) Ferrous and nonferrous volumes sold externally by AMR
and CSS and delivered to our steel mill for finished steel
production.

(2) Price information is shown after a reduction for the
cost of freight incurred to deliver the product to the customer.

(3) Excludes PGM metals in catalytic converters.

(4) Cars purchased by auto parts stores only.

(5) Rolling mill utilization is based on effective annual
production capacity under current conditions of 580 thousand tons of
finished steel products.

SCHNITZER STEEL INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

May 31, 2018

August 31, 2017

Assets

Current assets:

Cash and cash equivalents

$

10,090

$

7,287

Accounts receivable, net

190,195

138,998

Inventories

234,437

166,942

Other current assets

42,000

24,723

Total current assets

476,722

337,950

Property, plant and equipment, net

393,387

390,629

Goodwill and other assets

207,161

205,176

Total assets

$

1,077,270

$

933,755

Liabilities and Equity

Current liabilities:

Short-term borrowings

$

1,146

$

721

Other current liabilities

215,694

175,539

Total current liabilities

216,840

176,260

Long-term debt

171,545

144,403

Other long-term liabilities

69,323

75,599

Equity:

Total Schnitzer Steel Industries, Inc. (“SSI”) shareholders’ equity

614,975

533,586

Noncontrolling interests

4,587

3,907

Total equity

619,562

537,493

Total liabilities and equity

$

1,077,270

$

933,755

Non-GAAP Financial Measures

This press release contains performance based on adjusted net income and
adjusted diluted earnings per share from continuing operations
attributable to SSI and adjusted consolidated, AMR and CSS operating
income (loss), which are non-GAAP financial measures as defined under
SEC rules. As required by SEC rules, we have provided reconciliations of
these measures for each period discussed to the most directly comparable
U.S. GAAP measure. Management believes that providing these non-GAAP
financial measures adds a meaningful presentation of our results from
business operations excluding adjustments for other asset impairment
charges net of recoveries, restructuring charges and other exit-related
activities, recoveries related to the resale or modification of certain
previously contracted shipments, and income tax expense (benefit)
allocated to these adjustments, items which are not related to
underlying business operational performance, and improves the
period-to-period comparability of our results from business operations.
Adjusted operating results in fiscal 2015 excluded the impact from the
resale or modification of the terms, each at significantly lower prices
due to sharp declines in selling prices, of certain previously
contracted bulk shipments for delivery during fiscal 2015. Recoveries
resulting from settlements with the original contract parties, which
began in the third quarter of fiscal 2016 and concluded in the first
quarter of fiscal 2018, are reported within selling, general and
administrative expense in the quarterly statements of income and are
also excluded from the measures. Further, management believes that debt,
net of cash is a useful measure for investors because, as cash and cash
equivalents can be used, among other things, to repay indebtedness,
netting this against total debt is a useful measure of our leverage.
These non-GAAP financial measures should be considered in addition to,
but not as a substitute for, the most directly comparable U.S. GAAP
measures.

($ in millions)

Quarter

YTD

3Q18

3Q17

2Q18

3Q18

3Q17

Consolidated operating income:

Operating income

$

51

$

19

$

33

$

111

$

34

Other asset impairment charges (recoveries), net

(1

)

(1

)

—

(2

)

(1

)

Restructuring charges and other exit-related activities

—

—

—

—

—

Recoveries related to the resale or modification of certain
previously contracted shipments

—

—

—

—

(1

)

Adjusted consolidated operating income

$

50

$

18

$

33

$

109

$

32

AMR operating income:

Operating income

$

55

$

30

$

45

$

135

$

67

Other asset impairment charges (recoveries), net

(1

)

(1

)

—

(1

)

(1

)

Recoveries related to the resale or modification of certain
previously contracted shipments

—

—

—

—

(1

)

Adjusted AMR operating income(1)

$

54

$

28

$

45

$

133

$

66

CSS operating income (loss):

Operating income (loss)

$

11

$

1

$

5

$

25

$

(3

)

Other asset impairment charges (recoveries), net

—

—

—

—

—

Adjusted CSS operating income (loss)(1)

$

11

$

1

$

5

$

25

$

(2

)

(1) May not foot due to rounding.

Net income from continuing operations attributable to SSI

($ in millions)

Quarter

YTD

3Q18

3Q17

2Q18

3Q18

3Q17

Net income from continuing operations attributable to SSI

$

37

$

17

$

41

$

97

$

27

Other asset impairment charges (recoveries), net

(1

)

(1

)

—

(2

)

(1

)

Restructuring charges and other exit-related activities

—

—

—

—

—

Recoveries related to the resale or modification of certain
previously contracted shipments

—

—

—

—

(1

)

Income tax expense (benefit) allocated to adjustments(1)

—

—

—

—

—

Adjusted net income from continuing operations attributable to SSI

$

36

$

16

$

41

$

95

$

25

(1) Income tax allocated to the aggregate adjustments
reconciling reported and adjusted net income from continuing
operations attributable to SSI is determined based on a tax
provision calculated with and without the adjustments.

Diluted earnings per share from continuing operations
attributable to SSI

($ per share)

Quarter

YTD

3Q18

3Q17

2Q18

3Q18

3Q17

Diluted earnings per share from continuing operations attributable
to SSI

$

1.31

$

0.60

$

1.42

$

3.38

$

0.96

Other asset impairment charges (recoveries), net

(0.05

)

(0.04

)

—

(0.05

)

(0.02

)

Restructuring charges and other exit-related activities

—

—

—

0.01

(0.01

)

Recoveries related to the resale or modification of certain
previously contracted shipments

(1) Income tax allocated to the aggregate adjustments
reconciling reported and adjusted diluted earnings per share from
continuing operations attributable to SSI is determined based on a
tax provision calculated with and without the adjustments.

(2) May not foot due to rounding.

Debt, net of cash

($ in thousands)

May 31, 2018

February 28, 2018

August 31, 2017

Short-term borrowings

$

1,146

$

793

$

721

Long-term debt, net of current maturities

171,545

210,031

144,403

Total debt

172,691

210,824

145,124

Less: cash and cash equivalents

10,090

15,007

7,287

Total debt, net of cash

$

162,601

$

195,817

$

137,837

About Schnitzer Steel Industries, Inc.

Schnitzer Steel Industries, Inc. is one of the largest manufacturers and
exporters of recycled metal products in North America with operating
facilities located in 23 states, Puerto Rico and Western Canada.
Schnitzer has seven deep water export facilities located on both the
East and West Coasts and in Hawaii and Puerto Rico. The Company’s
integrated operating platform also includes auto parts stores with
approximately 5 million annual retail visits. The Company’s steel
manufacturing operations produce finished steel products, including
rebar, wire rod and other specialty products. The Company began
operations in 1906 in Portland, Oregon.

Safe Harbor for Forward-Looking Statements

Statements and information included in this press release that are not
purely historical are forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934 and are made pursuant
to the “safe harbor” provisions of the Private Securities Litigation
Reform Act of 1995. Except as noted herein or as the context may
otherwise require, all references in this press release to “we,” “our,”
“us,” “Company,” “Schnitzer,” and “SSI” refer to Schnitzer Steel
Industries, Inc. and its consolidated subsidiaries.

Forward-looking statements in this press release include statements
regarding future events or our expectations, intentions, beliefs and
strategies regarding the future, which may include statements regarding
trends, cyclicality and changes in the markets we sell into; the
Company’s outlook, growth initiatives or expected results or objectives,
including pricing, margins, sales volumes and profitability; strategic
direction or goals; targets; changes to manufacturing and production
processes; the cost of and the status of any agreements or actions
related to our compliance with environmental and other laws; expected
tax rates, deductions and credits and the impact of the recently enacted
federal tax reform; the impact of tariffs and other trade actions; the
realization of deferred tax assets; planned capital expenditures;
liquidity positions; ability to generate cash from continuing
operations; the potential impact of adopting new accounting
pronouncements; obligations under our retirement plans; benefits,
savings or additional costs from business realignment, cost containment
and productivity improvement programs; and the adequacy of accruals.

Forward-looking statements by their nature address matters that are, to
different degrees, uncertain, and often contain words such as “outlook,”
“target,” “aim,” “believes,” “expects,” “anticipates,” “intends,”
“assumes,” “estimates,” “evaluates,” “may,” “will,” “should,” “could,”
“opinions,” “forecasts,” “projects,” “plans,” “future,” “forward,”
“potential,” “probable,” and similar expressions. However, the absence
of these words or similar expressions does not mean that a statement is
not forward-looking.

We may make other forward-looking statements from time to time,
including in reports filed with the Securities and Exchange Commission,
press releases, presentations and on public conference calls. All
forward-looking statements we make are based on information available to
us at the time the statements are made, and we assume no obligation to
update any forward-looking statements, except as may be required by law.
Our business is subject to the effects of changes in domestic and global
economic conditions and a number of other risks and uncertainties that
could cause actual results to differ materially from those included in,
or implied by, such forward-looking statements. Some of these risks and
uncertainties are discussed in “Item 1A. Risk Factors” in Part I of our
most recent Annual Report on Form 10-K, as supplemented by our
subsequently filed Quarterly Reports on Form 10-Q. Examples of these
risks include: potential environmental cleanup costs related to the
Portland Harbor Superfund site or other locations; the cyclicality and
impact of general economic conditions; uncertainty in global markets
including the impact of tariffs and other trade actions; volatile supply
and demand conditions affecting prices and volumes in the markets for
both our products and raw materials we purchase; imbalances in supply
and demand conditions in the global steel industry; the impact of
goodwill impairment charges; the impact of long-lived asset and cost and
equity method investment impairment charges; inability to sustain the
benefits from productivity and restructuring initiatives; difficulties
associated with acquisitions and integration of acquired businesses;
customer fulfillment of their contractual obligations; increases in the
relative value of the U.S. dollar; the impact of foreign currency
fluctuations; potential limitations on our ability to access capital
resources and existing credit facilities; restrictions on our business
and financial covenants under our bank credit agreement; the impact of
consolidation in the steel industry; inability to realize expected
benefits from investments in technology; freight rates and the
availability of transportation; the impact of equipment upgrades,
equipment failures and facility damage on production; product liability
claims; the impact of legal proceedings and legal compliance; the
adverse impact of climate change; the impact of not realizing deferred
tax assets; the impact of tax increases and changes in tax rules; the
impact of one or more cybersecurity incidents; environmental compliance
costs and potential environmental liabilities; inability to obtain or
renew business licenses and permits or renew facility leases; compliance
with greenhouse gas emission laws and regulations; reliance on employees
subject to collective bargaining agreements; and the impact of the
underfunded status of multiemployer plans in which we participate.